85R7382 ADM-F
By: Kolkhorst S.B. No. 745
A BILL TO BE ENTITLED
AN ACT
relating to the exemption of certain services performed by certain
employees from the sales and use tax.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 151.057, Tax Code, is transferred to
Subchapter H, Chapter 151, Tax Code, redesignated as Section
151.3503, Tax Code, and amended to read as follows:
Sec. 151.3503 [151.057]. SERVICES BY EMPLOYEES. (a) The
following [services] are exempted from the taxes imposed by [not
taxable under] this chapter:
(1) a service performed by an employee for the
employee's [his] employer in the regular course of business, within
the scope of the employee's duties, and for which the employee is
paid [his] regular wages or salary;
(2) a service performed by an employee of a temporary
employment service [as defined by Section 93.001, Labor Code,] for
an employer to supplement the employer's existing work force on a
temporary basis, if:
(A) [when] the service is normally performed by
the employer's own employees;
(B) [,] the employer provides all supplies and
equipment necessary to perform the service;
(C) the employer does not rent, lease, purchase,
or otherwise acquire for use the supplies and equipment described
by Paragraph (B) from the temporary employment service or an entity
that is a member of an affiliated group of which the temporary
employment service is also a member;
(D) the temporary employment service is not a
member of the employer's affiliated group; and
(E) [, and] the employee of the temporary
employment service [help] is under the [direct or general]
supervision of the employer to whom the employee of the temporary
employment service [help] is furnished; or
(3) a service performed by covered employees of a
professional employer organization, either licensed under Chapter
91, Labor Code, or exempt from the licensing requirements of that
chapter, for a client under a written contract that provides for
shared employment responsibilities between the professional
employer organization and the client for the covered employees,
most of whom must have been previously employed by the client.
(b) The comptroller shall prescribe by rule the minimum
percentage of covered employees that must have been previously
employed by the client, the minimum time period the covered
employees must have been employed by the client prior to the
commencement of its contract, and such other criteria as the
comptroller may deem necessary to properly implement Subsection
(a)(3) [this section].
(c) For purposes of this section, an employee of a temporary
employment service is under the supervision of an employer if the
employer has the sole right to direct and control the employee as
necessary to conduct the employer's business or to comply with any
licensing, statutory, or regulatory requirement applicable to the
employer.
(d) In this section:
(1) "Affiliated group" has the meaning assigned by
Section 171.0001.
(2) "Temporary employment service" has the meaning
assigned by Section 93.001, Labor Code.
SECTION 2. The changes in law made by this Act apply only to
a service commenced on or after the effective date of this Act. A
service commenced before that date is governed by the law in effect
on the date the service was commenced, and the former law is
continued in effect for that purpose.
SECTION 3. This Act takes effect September 1, 2017.